CEOCFO:Dr. Burba, International Battery Metals, Inc. acquired Selective
Absorption Lithium (SAL) on April 13th. Would you tell us about
the origins of the relationship, your role with SAL and your role now with
International Battery Metals?

Dr. Burba:
I have been in and out of the lithium industry since 1979. My first exposure
was with Dow Chemical Co. at that time and later with FMC Corporation and
then a couple other ins and outs as I have gone through different phases of
my career.

In the early
1990’s Dr. Bill Bauman and I invented a material, CLA, that will selectively
remove lithium from brine. It is very specific, absorbing only lithium
chloride. It does not take any other metal ions out of the brine. This
material demonstrates surprisingly high specificity for lithium over all
other metal ions that are found in brines.

Lithium
baring brine resources are highly complex systems. It is not just like a
simple sodium chloride solution. They have very high concentrations of many
different salts. Because of its unique crystal structure, CLA literally
picks up only lithium chloride. Several years after we filed patents on the
CLA material, I went to work for FMC. At the time, they were in great need
of a new technology to extract lithium from a salar that they had acquired,
Salar del Hombre Muerto in Argentina. FMC had intended to use solar
evaporation for that process. On the surface, this appeared to be a good
technology choice. Foote Mineral Company had pioneered lithium recovery by
solar evaporation at Silver Peak, NV and they were extracting lithium via
solar evaporation in the Atacama Desert in Chile. Unfortunately, the process
did not work well at Salar Hombre Muerto. This was due to brine composition
issues.

Solar
Evaporation is what the name implies. Basically, you bring the brine out of
the ground and then you have a series of evaporation ponds that are sized to
match flow of the brine and evaporation rates. As brine flows through the
ponds, water is evaporated. Because the brine is saturated, relatively pure
salt fields are laid down. Flow rates and pond sizes are controlled such
that a given salt field is deposited in a given pond. The first pond
collects sodium chloride. Other salts such as potassium magnesium chloride
and potash, are removed in subsequent ponds. Ultimately, lithium chloride
solution is left in the last pond. This is a pretty impure solution. The
brine is then processed through a chemical purification process and a
lithium carbonate process.

FMC wanted to
use solar evaporation, but it did not work because of brine chemistry. The
result of this problem was a development program to test our invention and
develop a process. Ultimately, the technology worked and my partner and I
sold our technology to FMC. The plant started up in 1998.

CEOCFO:
That was quite an accomplishment at the time for you and Dr. Bill Bauman.

Dr. Burba:
Yes, it was. Unfortunately, Bill is no longer with us or I would still be
partnering with him on everything. He was one of the most brilliant men and
a terrific guy.

CEOCFO: Is
FMC still using the plant and technology you and Dr. Bauman developed?

Dr. Burba:
It has been FMC’s source of lithium since 1998. There are a couple of
features in that process that make it really interesting. It is actually a
low cost process because you do not have to spend a lot of money in removing
high concentrations of impurities. It produces a feed stock to the lithium
carbonate that is extremely pure. This allows FMC to produce very pure
lithium carbonate.

Ever since
the plant started up it has produced the highest purity primary lithium
carbonate in the world. The new battery grade specs for lithium carbonate
are the FMC product quality specs. I was just reading recently on the FMC
website that they receive significant premium for their lithium carbonate
because of its purity.

However,
there are also some disadvantages to the process. Specifically, you have to
build a huge plant and it needs to sit on top of a big resource because of
the engineering realities. Lithium extraction plants are typically large
stationary facilities that cannot be moved. In order to economically employ
FMC’s technology you need to have a really big resource with brine that has
very good flow. Basically, you want to sit on top of a brine lake, which is
in essence what these salars are. They are salt structures with very high
porosity and saturated brine is in these pores, so it is very easy to pump
out.

CEOCFO:
That is the technology that you sold to FMC.

Dr. Burba:
That is the technology that we sold to FMC. Yes it is.

CEOCFO:You have since developed a new technology to accomplish the same
objectives. Why was that necessary?

Dr. Burba:
Our technology is focused on being able to extract lithium from oilfield
brine resources. Oilfield conditions favor small, portable extraction units
that can produce intermediate products that can be economically shipped to a
central chemical plant where the final product is produced. When I started
evaluating the idea of economically extracting lithium from oilfield brines,
I had my doubts that it would be feasible because these resources are just
too defused. The resource does not fit an FMC style extraction facility.

Finally, I
asked “What needs to be different?” It struck me that smaller high
efficiency mobile units would be a better approach for this problem.
However, this concept would require a complete reengineering of the entire
extraction process and engineering. Therefore, I sat down and started doing
some work and came up with the concept of our mobile extraction units. We
also have some improvements on the absorbent as well. I then got with a
couple of engineers that I worked with who are absolutely outstanding and we
formed a company called NA Lithium. We started talking to people about
contracting with us to build lithium plants and oil field applications. We
started working on that and through a roundabout process we got connected
with the International Battery Metals guys. At the time the company was
called Rheingold Exploration Corp. We started talking about what we could do
and ultimately we decided that a merger made the most sense. We closed our
deal a couple of weeks ago.

CEOCFO:
Will you be selling and licensing to the companies you work with?

Dr. Burba:
Great question. We do not intend to license our technology. However, we are
happy to partner with other companies. These partnerships will probably be
similar to what oilfield Exploration and Production companies do. For
instance, several oil companies may decide to co develop a resource. One of
those companies will function as the operator.

In a similar
manner, we would function as the operating partner. We like this concept
because there are a lot of resources out there. The attractive thing about
the oil industry and the oil fields is that through drilling all these
wells, the operators have found vast amounts of brine that contain
impressive amounts of lithium just in Canada and the United States.

Developing
the ability to economically extract lithium from oilfield brines is very
important to our industry. The supply/demand picture for the lithium
industry is pretty dire. To keep up, we need new, untapped resources to come
on line. The current lithium producers have some bright business people
great engineers that certainly know how to do what they are doing and they
have done it a long time. However, rapid expansion is a real problem. I
question whether the industry will be able to keep up with long term lithium
demand unless we bring new resources online in a timely manner. Recent
solar evaporation projects have required over a decade to come on line.

This is the
problem that Ibat is trying to solve. We believe that efficient lithium
extraction for oilfield brine will go a long way toward solving this issue.

CEOCFO:
What are the drives for lithium?

Dr. Burba:
This is not dissimilar to what the oil and gas industry underwent in the
early 20th century. The drivers are similar. The lithium industry
today is driven by three big needs. The first is transportation. China is
leading the way. They have such a huge pollution problem in the big cities
that is a health menace, so the Chinese government is trying to clean up the
air. Therefore, going to electric vehicles is an obvious way to minimize
pollution sources. The EU is really pushing this hard because of the CO2
issues. A lot of people in the United States want the same thing.

The second
driver is grid stabilization and security. In a lot of places we have
essentially the same electric grid that was built one hundred years. These
grids are old and overburdened and it does not take much to create a
brownout. The idea now is to utilize battery systems that can respond to
issues and prevent supply disruptions. The industry is also are looking for
battery backup for solar and wind in conjunction with natural gas.

The third
driver is the datacenters. Our society is producing unbelievable amounts of
data every day. Most of this data is stored in large data farms. One of the
fastest growing construction activities in North America is building
datacenters to handle all the cloud information. These data farms must have
reliable electricity back up to avoid data loss in the event of a power
disruption. Lithium ion batteries are rapidly moving into this space.

Demand for
these three battery applications are growing at about the same rate so
fundamentally we have reached a tipping point in global society. Today
lithium is the chemistry of choice for high power, light weight batteries. I
am often asked if other battery chemistries will replace lithium. I always
go back to the chemistry. In my opinion, lithium has the best set of
fundamental chemistry characteristics for rechargeable batteries. We all
know that you never say never. However, I think that lithium based
rechargeable batteries will be with us for a long time.

CEOCFO:
How much lithium comes from oil fields today?

Dr. Burba:
Today there is no commercial oil field production.

CEOCFO:
Sounds like you are going to revolutionize the lithium industry!

Dr. Burba:
Yes. The challenge that I am putting to our group is we will be the first
commercial oil field lithium exploration production company. We are
patterning this company after oil and gas companies. We expect that our
technology will allow us to do that.

CEOCFO:
Where are you in the process? Have you already started to apply your new
technology?

Mr. Burba:
No. We filed a number of key patent applications and we have a number more
that will be coming out. We are now take some engineering steps and build
our first extraction unit. We have already begun the design work on that so
we are far along. We need to test out some models in a laboratory. Then we
will build our first big unit and put it at a site in the field and start
our operation. We are engineering these devices to be mass produced. If we
are successful this will be a significant feature. We will not have to go
out and build in the field and build foundations and haul in giant
equipment. We can have these things built in fab shops.

CEOCFO:
Lithium is very important to the green industry. What are the environmental
concerns in mining and processing lithium?

Mr. Burba:
Several years ago there were several articles that it pointed out that
lithium production was a dirty process and although it has been tied to
green electric vehicles. This is a fair criticism of some current lithium
production plants. Currently lithium comes from two sources. It comes as a
pegmatite rock through hard rock mining. Typically, this is open-pit mining
with the consummate rock piles and tailings ponds. This process consumes a
lot of chemicals and produces correspondingly large amounts of chemical
waste. This is also the most expensive route to get to get the lithium
carbonate. Today that accounts for 45% to 49% of global lithium production.
The rest of the lithium produced comes from brine resources in the Atacama
in Chile and Salar del Hombre Muerto in Argentina.

There are two
processes for lithium brine production, the FMC Selective Absorption process
and solar evaporation. Solar evaporation generates huge amounts of waste
salt that is stacked on the salar. It also covers thousands of acres of land
with evaporation ponds.

Our process
will be different. We will pump brine from the ground, recover the lithium
and pump the brine back down an injection well. So, our process will have a
much smaller environmental footprint.

CEOCFO:
What is involved in the traditional processing of lithium?

Mr. Burba:
If you want to go out and build a lithium plant, you first have to find a
salar, and now you have to drill that thing to determine if there is enough
lithium to justify the cost. That is about a two-year process if everything
goes well. Typically engineers will construct a pilot scale plant to test
critical steps in the process. Then a full plant is designed based on the
pilot data. After that the full plant is constructed, taking another 2 to 4
years. Based on recent industry costs, you are going to spend on average
between $300 million to $600 million by the time you are all done. This does
not include start-up costs. Additionally, lithium carbonate will begin
eighteen to twenty four months after the plant is started up. Recent
history indicates that from start to end the process will require from about
8 to 12 years to reach production.

CEOCFO:How will your technology change that?

Dr. Burba:
Our vision is to produce high tech mobile extraction units that can be
placed in locations where we have access to appropriate lithium containing
brine, and utilities. Once we have built and demonstrated our prototype, we
will be able to mass produce these units. Because the units are mobile, we
can place them in a field. If lithium concentrations drop off, we can move
them to a different location and start again. Furthermore, the
characteristics of the selective absorption technology allows us to
effectively operate in a wide range of brine compositions.

The result of
these characteristics is that our goal is to dramatically reduce the time
that is necessary to build and startup a new resource.

CEOCFO:What are you doing to get the word out about your efforts? Are you
attending conferences? Do you have a web page where you list your releases?
Are you keeping up with social media and blogs to enable people to follow
you and your efforts?

Dr. Burba:
The merged company has been together now for six days. We are rapidly
putting things in place. We are working on our corporate presentation. I
have given a number of talks at various conference and we will be going to
more conferences. I am happy to talk with anybody at any time. I think that
the technology is exciting for us and the company is exciting but I think
this is the kind of thing that needs to happen in order for the industry to
be able to respond to the stunning demand, because otherwise the industry is
going to get throttled just from lack of lithium. Our goal is to develop a
low cost, an environmentally responsible, elegant lithium extraction and
production system that can be rapidly deployed in target resources. Once
proven, we believe that this technology will allow us to significantly
reduce resource development time, allowing rapid exploitation of new
untapped resources.

“Our goal is to develop a low cost, an environmentally responsible, elegant
lithium extraction and production system that can be rapidly deployed in
target resources. Once proven, we believe that this technology will allow us
to significantly reduce resource development time, allowing rapid
exploitation of new untapped resources.”
- Dr. John Burba, Ph.D